9911796707
TMI Blog2017 (4) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... tributor of various cable television channels. It has been issued a licence as a multi system operator, permitting it to receive cable television services from the broadcaster and distribute the same directly to the subscribers or through local cable operators. The provisions of Cable Television Networks (Regulation) Act, 1995 readwith U.P. Cable Television Network (Exhibition) Rules, 1997 are also attracted upon the activity undertaken by the petitioner. Petitioner under the relevant provisions was required to maintain details of cable services provided to subscribers, for the purposes of payment of tax, but such details were allegedly not submitted and notices issued in that regard were not responded. No assessment could thus be made. A surprise inspection was ultimately carried out on the petitioner's premises on 15.10.2014 by a team headed by Additional District Magistrate alongwith Cyber Experts, and various data/details were obtained. It was found that petitioner till August, 2013 had installed 49012 Set Top Box (hereinafter referred to as 'STB'), whereas entertainment tax deposited by it till month of October, 2014 was only in respect of 20990 STB. It was also fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tstanding of Rs. 1,16,321/- is concerned, the same was accepted. Explanation that 3330 STBs were being run through other multi system operator was rejected on the ground that at the time of survey, 49012 set top boxes were found to be functional through petitioner's network, and any diversion, as alleged, may have been in addition to such numbers. Further explanation that STBs in excess of number installed were availed, was also rejected, as it was found that 49012 STBs were in fact operational at the time of inspection. The claim of subscription amount being Rs. 100/- instead of Rs. 150/- was also rejected. So far as petitioner's contention about receiving of entertainment tax from the local cable operator is concerned, the same was turned down on the ground that by virtue of amendment introduced in Section 3 on 16th June, 2009, it is the multi system operator, which was liable to deposit entertainment tax. Since such amount had already been realized from the franchise local cable operator, accordingly, after adjusting the amount already deposited, a sum of Rs. 1,52,13,055/- was assessed as the amount payable towards entertainment tax. 5. Aggrieved by the aforesaid order, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 79 are reproduced:- "2. Definitions.- In this Act,- (a) 'admission to an entertainment' includes admission to any place in which [the entertainment is held or any place wherefrom entertainment is provided by means of the cable television network or Direct to Home service or any other emerging transmission by whatever name called;] XXXXX XXXXX XXXXX 1[(ee) 'cable operator' means any person who provides cable service through a cable television network or otherwise controls or is responsible for the management and operation of cable television network and includes the proprietor of a hotel who provides cable service in the hotel through his own cable television network;] 2[(ee) 'cable service' means the transmission by cables of programmes including retransmission by cables of any broadcast television signals;\ (eee) 'cable television network' means any system consisting of a set of closed transmission paths and associated signal generation, control and distribution equipment, designated to provide cable service for reception by multiple subscribers;] XXXXX XXXXX XXXXX (g) 'entertainment' includes any exhibition, performan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her device at a residential or non-residential place of a connection holder; or (vii) any payment made by person to the proprietor of a Direct-to-Home service or any other service by whatever name called, by way of contribution or subscription or installation and connection charges or any charges collected in any manner by whatever name called either directly or through any agency established for the purpose for Direct-to-Home service with the aid of set top box or any other device of like nature which connects television set or any other device at a residential or non-residential place of a connection holder directly to the satellite without passing through an intermediary such as cable operator; Explanation- For the purposes of sub-clauses (vi) and (vii) any expenditure incurred by any co-operative society including a co-operative housing society or by the management of any factory, hotel, lodge, bar, permit room, pub or by a person or group of persons for the purchase of any type of antenna or any other apparatus for securing transmission through cable television network, Direct-to-Home service or any other service by whatever name called, for its member or for workers or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the proprietor from the person making the payment for admission and paid to the Government in the manner prescribed: Provided that a proprietor of a cinema or cable operator may, in lieu of payment under this sub-section, pay a compounded payment to the State Government on such conditions and in such manner as may be prescribed and at such rate, as the State government may from time to time notify, and different rates of compounded payments may be notified for different categories of local areas: Provided further that in the case of cable service, the proprietor of the cable service control room/multi system operator shall be liable to pay the tax, irrespective of the fact whether he collects it directly from the person making the payment for admission or indirectly through an associate or franchise cable operator or an agent, who in turn collects it from the person making the payment:" 10. It is clear that 'entertainment tax' is to be 'levied' and 'paid' on all aggregate payments required for admission to any entertainment. 'Admission to an entertainment' is defined to include admission to any place, in which the entertainment is held o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmit that the provision existing in this State is similar to the one that fell for consideration of Apex Court in State of West Bengal and others Vs. Purvi Communication (P) Ltd. And others, reported in (2005) 3 SCC 711. 12. The issue that arose for consideration before the Delhi High Court was in the context of a challenge laid to a circular and notices issued, requiring the multi system operator to pay entertainment tax. The provision of the Delhi Act, which fell for consideration got noticed in para-24 of the judgment in Siti Cable Networks Limited (supra), and is reproduced:- "24. Before we analyse and discuss the submissions of the parties, it would be necessary to set out the relevant provisions of the said Act and Rules: Provisions of the said Act: 2. Definitions In this Act, unless the context otherwise require,- xxxx xxxx xxxx xxxx "(fb) "cable operator" means any person who provides cable service through a cable television network or otherwise controls or is responsible for the management and operation of a cable television network. xxxx xxxx xxxx xxxx "(g) "cable service" means the transmission by cables of programme including re-transmission by cab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvice (1) Subject to the provisions of this Act, there shall be levied and paid an entertainment tax on all payments for admission to an entertainment through a direct-to-home (DTH) or through a cable television network with addressable system or otherwise, other than entertainment to which section 6 applies, at such rates not exceeding rupees six hundred for every subscriber for every year, as the government may, from time to time, notify in this behalf, which shall be collected by the proprietor and paid to the Government in the manner prescribed. (2) Nothing in sub-section (1) shall preclude the government from notifying different rates of entertainment tax for household, or for different categories of hotels, (3) Where the subscriber is a hotel or a restaurant; the proprietor may, in lieu of payment under sub-section (1), pay a compounded payment to the Government on such conditions and in such manner as may be prescribed and at such rate as the Government may, from time to time, notify and different rates of compounded payment may be notified for the different categories of hotels. (4) The proprietor of a video cinema shall be liable to pay entertainment tax at a r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ules (2) and (3) of rule 25 shall mutatis mutandis apply." The Court then proceeded to hold as under:- "40. To be clear, MSOs to the extent that they directly provide cable service to the subscribers without the intervention of any LCO, would be regarded as the 'proprietors' under Section 7(1) and would be liable to collect and pay the entertainment tax to the Government. However, where the MSOs provide the service through the LCOs, the individual LCOs having their own subscriber networks, would be regarded as the proprietors in respect of their individual networks and would be liable to collect the entertainment tax and pay the same to the Government." 13. The Court in Siti Cable Networks Limited (supra) quoted with approval para-41 of the judgment in Bharti Telemedia Ltd. Vs. Government of NCT of Delhi, reported in (2011) 44 VST 262, which had interpreted the relevant provisions. After elaborately discussing the provisions, following principles were culled out in para-40 of the judgment:- "40. ....The tax is on the entertainment and not the manner in which the content of entertainment reaches the actual persons entertained. The tax is not on the content provider o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 38. It will be seen that the expression 'cable operator' has been referred to in the said provision. 'Cable operator' was, under the West Bengal act, defined to mean any person who provides cable service 'directly to customers or transmits signals to a sub-cable operator through a cable television network and otherwise controls or is responsible for the management and operation of a cable television network". It is, therefore, clear that the 'cable operator' referred to in the West Bengal Act, which is sought to be equated to an 'MSO' under the said Act, was entirely different. Under the West Bengal Act, a specific liability was created in respect of the 'cable operator' which is not the case with an MSO under the said Act. Therefore, in our view, the decisions both in Purvi Communication (supra) and IndusInd Media (supra) which have reference to the West Bengal act and the Gujarat act, respectively, would be of no help to the respondents where the concepts and definitions under the said Act applicable to Delhi are entirely different." 15. Section 7 of the Delhi Entertainment and Betting Tax Act, 1996, clearly imposes liability of paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, I find that the petitioner has, at no stage, furnished details of the local cable operator, which according to it, had offered admission to entertainment. Petitioner was expected to furnish details of the total STBs installed, number of STBs for which subscription was directly realized by it or through its associates, agents and franchisees as well as details of those connections, which were offered through local cable operators. It is to be noticed that neither before the assessing authority, nor before the appellate authority or even before this Court, any details have been furnished of the local cable operators, who are stated to have offered admission to entertainment to the end subscriber, and the plea taken in that regard thus need not be entertained. 18. A supplementary affidavit had been filed before the appellate authority, wherein following questions for consideration were formulated. Paras 14 to 17 are reproduced:- "14. That it is pertinent to mention here that till the year 2013 in district Allahabad also the Cable Operators were collecting and depositing the tax on their own there was no role of Multi system Operator in collecting and depositing except in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tting Tax Act, 1979 one observed by the Entertainment Authorities in Allahabad and other observed by Entertainment Authorities in entire Uttar Pradesh, excluding Allahabad?" 19. Even before this Court, submissions are advanced on behalf of the petitioner to the effect that the multi system operator is not liable to be taxed in respect of a cable connection offered by local cable operator. This argument, however, needs to be considered and examined only in a case where petitioner furnishes details of local cable operator, who are stated to have offered admission to entertainment by providing cable connection. The argument raised seems more academic in nature and without any factual foundation laid for it. The second proviso to section 3(1) otherwise makes the proprietor of cable service control room/multi system operator liable to pay tax, whether he collects it directly or indirectly from an associate of franchisees or agent. The statutory obligation imposed upon the multi system operator wold be clearly attracted. 20. A compliance affidavit and supplementary counter affidavit have been filed on behalf of the State annexing affiliation agreement executed between the petitioner a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to principal basis and not on agency basis. Learned counsels have also referred to certain decisions as to in what manner the clauses of affiliation agreement have to be read. These arguments, however, need not be examined in the absence of details furnished by the petitioner of the cable connections provided by the cable operators. The initial burden to pay tax is upon the multi system operator and such responsibility could be shifted upon a cable operator only when details are furnished by multi system operator of cable connections distributed through independent cable operators. In the absence of details furnished in that regard. I am not inclined to enter into any dispute with regard to respective liability of a multi system operator viz-a-viz local cable operator in the facts of the present case. 22. In view of such discussions, it is held that by virtue of second proviso to section 3(1) of the Act of 1979, the liability to pay entertainment tax in respect of admission to entertainment offered through a multi system operator would be upon the proprietor of the cable service control room/multi system operator and it is immaterial whether he collects it directly from subscriber ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m operator, could be taxed for the cable connections provided by sub cable operator. Para 39 to 44, 52 & 53 of the judgment in State of West Bengal vs. Purvi Communication (P) Ltd. (supra) is reproduced:- "39. In the tax matters, the State Legislature is free, if it has legislative competence, to choose the persons from whom the tax levied on entertainments is to be collected. In other words, what are taxed are the entertainments, which is very much within the ambit of Entry 62 of List II of the Seventh Schedule. It is the respondents who as cable operator for the purpose of the said 1982 Act are engaged in the business of providing or offering entertainments which include showing of films, various serials, cricket matches and dramatic performances to the subscribers, and the tax is imposed on the act of offering such entertainments in this way to such subscribers and/or viewers. The entire communication network service is built up and controlled by the respondents. Whatever amount is received or receivable by the respondent in respect of providing such entertainments is taxable under sub-section (4-a) of Section 4-A of the said 1982 Act which has a direct and sufficient nexus wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us the objects sought to be achieved by two different Acts enacted under two different legislative fields exclusively assigned to the respective legislatures are entirely distinct and separate. The Cable Television Networks (Regulation) Act, 1995 of the Union Legislature does not denude the State Legislature of the power of levying entertainment tax on entertainment. 42. It is thus clear that the cable operator, Respondent 1 is the exhibitor in this case and also the provider of the entertainment to the customer. Hence, he alone can be asked to pay the tax on the entertainment that has resulted from this exhibition. This provision, therefore, does not cross the bounds of Entry 62 of List II of the Seventh Schedule to the Constitution and is intra vires. Providing a cable link up to the viewers' end is the only role of sub-cable operator. It is, therefore, inconceivable that despite putting forth the ready entertainment in the form of signal on the cable line, the cable operator cannot be said to be providing the entertainment within the meaning of Entry 62 of List II of the Seventh Schedule of the Constitution. So long as the State Act remains within the ambit of Entry 62 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. 44. Sub-section (4-a) of Section 4-A of the Act recognises the reality that entertainment is possible through such contact. Clause (i) of sub-section (4-a) speaks of a situation where the cable operator "exhibits directly". Clause (ii) speaks of the situation where the cable operator does not exhibit directly, but transmits the signals to the sub-cable operator. Significantly, the clause does not say that the sub-cable operator exhibits, it rather says that the sub-cable operator "provides cable service for exhibition". It is reasonable to conclude that these provisions imply that the exhibition is being held here also by the cable operator, only the technical link of the cable service has been provided by the sub-cable operator. The cable operator is also the exhibitor in this case; he is the provider of the entertainment to the customer. Hence he can be asked to pay tax on the entertainment that has resulted from this exhibition. The provision, therefore, does not cross the bounds of Entry 62 of List II of the Seventh Schedule of the Constitution and is intra vires. 52. The arguments advanced by learned Senior Counsel for the respondents with reference to Entry 31 of Lis ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
